Wealthfront has become the first automated investment service to launch its own tax-advantaged 529 college savings plan, it announced Wednesday.
Wealthfront will be the investment advisor behind the Wealthfront 529 College Savings Plan, and will fully manage all 529 portfolios on behalf of its clients.
Because it’s only possible to offer a 529 plan if sponsored by a state, the Wealthfront 529 College Savings Plan will be administered by the Board of Trustees of the College Savings Plans of Nevada, chaired by the Nevada state treasurer.
Ascensus College Savings, a leading administrator of 529 plans, will serve as the program manager.
“We are excited to be the first automated investment service to offer a 529 college savings plan together with Nevada and Ascensus College Savings, who value innovation as much as we do at Wealthfront,” Adam Nash, President and CEO of Wealthfront, said in a statement. “Wealthfront exists to push the limits of what is technically possible in the financial services industry and broadly deliver investment strategies that previously were only available to the wealthy.”
BlackRock’s FutureAdvisor offers free college savings plans on its online advice platform, although it works with a number of state 529 plans that are overseen by Fidelity Investments or TD Ameritrade. FutureAdvisor clients can also set up other vehicles often used for college savings, like Coverdell Educational Savings Accounts, Unified Transfers to Minors Accounts and Unified Gifts to Minors Accounts.
Within the Wealthfront 529 College Savings Plan, Wealthfront plans to use “the power of software technology” to offer the best attributes of both the advisor-sold plan and the direct-sold plan.
“Advisor-sold plans are delivered with financial planning advice and employ portfolio strategies that are typically more sophisticated in nature,” writes Ali Rosenthal, vice president of strategic partnerships at Wealthfront, in a blog post. “As a result, they charge higher fees than direct-sold plans, which offer no advice or personalization and portfolios that are less sophisticated.”
The Wealthfront 529 plan aims to offer personalized advice that will recommend exactly how much to save and contribute each month at a price that rivals direct-sold 529 plans.